The most innovative part of the Audi A3 E-Tron prototype isn't found under the hood or in its battery compartment. Instead, one must sit in the driver's seat and move slightly to the side, then peer at the two smallish steering wheel-mounted paddle shifters.

On traditional internal combustion engine (ICE) vehicles, a quick tug on the left paddle shifts the transmission down one gear while the right is used for shifting the gearbox up. However, nearly all battery-electric vehicles (BEV) have but a single-speed transmission. Paddle shifters are completely unnecessary. The engineers at Audi, likely not wanting to leave gaping holes on the back of the trick sporty steering wheel, gave the two plastic flaps a new role – to control the intensiveness of regenerative braking.

It was a game-changing move.
Audi is no stranger to the electric movement. The automaker, part of the giant Volkswagen Group, has unveiled a handful of interesting EV concepts including the A1 E-Tron, R8 E-Tron and even the e-bike Wörthersee (Audi's "E-Tron" designation indicates that an advanced electrified powertrain with a plug-in capability is onboard). One of the latest additions to the automaker's development fleet is the A3 E-Tron, which is a fully functional roadgoing prototype.

The combustion-free powerplant makes 134 hp and 199 lb-ft of torque and the batteries hold 26.5 kWh of energy.

We met the A3 E-Tron in Hollywood, plugged into a charging station at a parking garage. Aside from the insanely oversized graphics, red accents on the alloy wheels, California CARB access sticker on the rear quarter panels and some new badging, one would be hard-pressed to tell this A3 from any one of the thousands already zooming around Southern California.

Yet opening the hood reveals the secret. While conventional ICE-powered A3s in the States feature either a gasoline-fed turbocharged 2.0-liter four-cylinder or a diesel-fed engine with the same displacement, the E-Tron is custom-fitted with an electric motor and a pair of lithium-ion battery packs. According to Audi, the combustion-free powerplant makes 134 horsepower and 199 pound-feet of torque and the batteries hold 26.5 kilowatt-hours of energy. That's enough power to hit 60 mph in about 10 seconds and enough juice for about 90 miles of travel. It is a bit slower than its siblings – but it doesn't burn one drop of fuel in the process.

The engineers had their work cut out skillfully hiding the batteries in the center tunnel and below the load floor in the trunk.

A closer look impressed us with how well Audi has managed the packaging. The combustion A3 is known for being a roomy compact five-door with plenty of hatchback utility, and it was a pleasant surprise to find the automaker was able to shoehorn the entire Battery Electric Vehicle powertrain into the chassis without cutting into the passenger compartment. Not one bit. There was plenty of space for the motor and transmission in the engine compartment, but the engineers had their work cut out skillfully hiding the batteries in the center tunnel (normally reserved for the exhaust and all-wheel drive) and below the load floor in the trunk (there is a mobility kit replacing a spare tire). The charging port is behind what was previously the fuel filler door, on the right rear quarter panel.

The driver interface also appeared to have emerged from the transformation mostly unscathed – until we started scrutinizing. The center console, with the exception of a few new buttons, remains mostly untouched. However, the primary instrument cluster is all new. Standard ICE gauges (e.g., tachometer and coolant temperature dials) have been replaced with a power meter and two battery level gauges directly over the small multifunction display. The speedometer, normally graduated to 160 mph, has been recalibrated down to a realistic 100 mph (the A3 E-Tron will only run 90 mph flat out). Other cabin systems have also been tweaked. The climate control has been altered to run in a more efficient mode, and the vehicle's trip computer has been reprogrammed for BEV duty.

Combustion engines are heavy, but batteries are even heavier. Audi says the lithium-ion packs add about 400 pounds of mass, bringing the A3 E-Tron's curb weight to about 3,800 pounds. Suspension upgrades counter the additional sprung mass while the braking system has been reconfigured with an energy recovery system (battery-powered vehicles use regenerative braking to recapture some of the energy wasted during slowing or stopping). Lastly, the rack-and-pinion steering, which is hydraulically assisted on the second-generation A3, has been replaced with an all-electric system.

A twist of the key brought the A3 E-Tron to life. Mirroring the powertrain response of the Tesla Model S, but unlike most other BEVs on the market, there is no "creep," a term frequently used with automatic transmission-equipped combustion-powered vehicles when they move forward slowly when in gear. Audi says creep wastes electricity, so the engineers programmed it so the operator must deliberately apply pressure to the accelerator to move the E-Tron forward. The low speed throttle calibration is good – we could crawl better than we normally creep.

After limitless fuel economy, torque is the other main selling point of electric propulsion. The A3 E-Tron delivers in that category as it moved smartly off the line from a standstill. The engineers have put a three-mode switch on the center console to give the driver an option of choosing one of several driving modes (Efficient, Normal or Sport). Efficient was borderline lethargic while Sport seemed uncharacteristic for the BEV mission. We finally settled on Normal, as it felt about right for our low-performance city driving conditions.

It won't set any land speed records, but after half an hour we were convinced that the A3 E-Tron rode better than any other A3 on the market, period. The additional weight carried by the electric model, combined with the proper suspension calibration, meant it felt solid over even the roughest pavement. There was no bottoming out, harsh impacts or wallowing either. We cruised up Sunset and down Hollywood Boulevard very comfortably. And silently.

Eureka! Audi has made the BEV fun to drive.

But the real game-changer, the visionary moment, occurred when we starting playing around with those steering wheel-mounted paddle shifters. As mentioned, all BEVs have regenerative braking, which is felt as drag on the vehicle when it is rolling. The A3 E-Tron takes things one leap further by allowing the driver to vary regenerative intensity. While not the only BEV that offers varying levels of regen intensity, it is the first that puts the controls at your fingertips like this. It may sound superfluous, but it works amazingly well as it replicates the physical attributes of a transmission downshifting.

Bring the A3 E-Tron up to 50 mph and pull the right paddle shifter a few times. With the throttle off, the hatchback will glide as if it is in Neutral. Give the left paddle a tug or two and it feels as if a six-speed manual was dropped into third gear. Pull it again and it replicates the higher drag of second gear. Not only does this increase the amount of energy being recycled, but it is amusingly enjoyable. Eureka! Audi has made the BEV fun to drive.

Don't march down to your Audi retailer with check in hand just yet.

After some time behind the wheel, we were certain that Audi's A3 E-Tron was infinitely more engaging to drive than Honda's Fit EV or Toyota's RAV4 EV, and much more affordable than anything Tesla is offering. But don't march down to your Audi retailer with check in hand just yet. As mentioned, this vehicle is a prototype. Nobody outside Audi is driving one of the dozen or so E-Trons currently in North American circulation.

Things will change for the 2014 model year. That's when Audi is likely to introduce the third-generation A3 in the States. Variants of the all-new platform (possibly now including a sedan) are expected to contain gasoline- and diesel-powered models, and, owing its existence to the research and development work labored by this A3 E-Tron BEV prototype, the automaker's first A3 plug-in hybrid (PHEV).

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The new A8... gorgeous vehicle. As is the new A3. And even for the current outgoing model (that vripper commented on) that is technically what... 7 years old? Just in the States? I would say that is still a fine looking automobile. Kudo's for Audi for designs that stand the test of time.

I think that putting the regen electric breaking on a different lever then the break pedal is a nice feature. I won't buy any electric bev or plug-in or fuelcell car if the regen breaking is not taking care of like the tesla and if it's automatically tied to the gas or break pedal. When raining or on snowy roads, it's important and more safer to have controllable regen breaking on a separate lever. The ones driving with automatic regen breaking when you lift the gas pedal are heading for accidents.

Standard generative braking when letting off the gas is EXACTLY the same as a traditional car.
In a traditional car it has engine/transmission drag to slow the car.
In the Prius, Insight etc there is regenerative braking drag since the engine is sometimes off creating no engine drag the brakes take the place of that.
When you hit the brake pedal on a Prius you get even more regenerative braking until you hit the threshold to where the standard brakes come in.
This Audi could be headed for accident city if someone "shifts" down 2 gears to slow down with the regenerative braking and no brakes lights come on.
Hopefully audi comes up with a flashing led or something to mimic a brake. Otherwise I could see people driving behind you at 50mph, you coming up to a red light.. double pulling the "regenerative lever" and slowing down without any brake lights coming on and getting rear ended.

I think it is completely overboard, to call changing regen a game changer.
Most people quickly get used to strong regen and 1 pedal drving as done in the Mini EV, changing regen with paddle shifters is more about novelty than game changing.

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Just like when manual cars brake lights come on when they downshift... If you're not able to pay attention enough to notice you are slowly getting closer to the car in front of you because it is decelerating then get off the road.

Difference is - if someone "double" downshifts and blips the throttle to slow down you have an audible noise to alert you that they are slowing.
I agree - people need to pay attention - but honestly do you want to put YOUR safety in the OTHER persons hands? I'd rather have the regenerative braking tied to some type of "brake" light to at least warn others you are slowing down faster than a typical car.